Financial analysis isn’t something I’m prepared to tackle publicly, so I’ve brought in some muscle for a multi-part series on TiVo’s numbers. Obviously this is speculative in nature and just one stockholder’s interpretation of the limited information TiVo chooses to disclose. Your mileage may vary. -DZ

In Part 1, we gave a value of TiVo’s existing subscriber base. But things are changing at TiVo: lifetime subscriptions are no longer available, and new subscribers can get free hardware, though they pay more in service fees. We need to know how this affects the value of new subscribers and how much TiVo should spend to acquire them.

To examine these issues, we will look at the Net Present Value (NPV) of subscribers, and the Return On Investment (ROI) in acquiring them (actually, instead of ROI, we’ll use MIRR, the Modified Internal Rate of Return). For the purposes of these calculations, we will use a 12% annual (1% per month) cash discount rate, as we did in Part 1. We will also use 12% as the finance rate for MIRR and 6% (0.5% per month) as the reinvestment rate (i.e., the return TiVo can obtain on short-term investments). As in Part 1, we will use 1% per month for subscriber churn, yielding an average sub life of 69 months. In this analysis, however, increasing the predicted churn rate will tend to reinforce our conclusions. Again, keep in mind that in this analysis, we are looking at value of bringing new subscribers on board, whereas in Part 1, we looked at the current value of existing subscribers.

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Want TiVoToGo on your Mac?
Nearly two years after being released, TiVo, Inc may have failed to deliver but the hacker community has heeded our call. As of 12/05/06 the solution requires a little elbow grease and some command line action, but the difficulty level is reasonable until a polished app arrives in the near future — perhaps integrated into Galleon.

So what makes this hack special?
TiVoToGo was originally released as a service accessed through the TiVo Desktop software — PC only. Files transfered from a Series2 TiVo unit are saved to the computer in a .tivo format. This .tivo file is actually an encrypted MPEG-2. While we quickly figured out how to remove TiVo’s gunk protection on Windows to free the MPEG, Mac and Linux users have been left out. Over the last year or so a dedicated group of hackers has been reverse engineering TiVo’s decryption mechanism which has now born fruit in the form of TiVo Decode. Utilizing your personal Media Access Key (MAK), TiVo Decode quickly removes TiVo’s protection as it converts the .tivo file to a .mpeg on multiple OSes without requiring any TiVo software.

What do I need to get started?
You’ll obviously need to download TiVo Decode. As of this writing, version 0.1.3 is out and now handles audio from DVD-burning TiVo units. Once you download the package, you can use StuffIt, or equivalent, to decompress the files. The software doesn’t come compiled, so you’ll need Xcode to assist. Xcode can be located on your OS X install discs and/or in an install directory on your Mac (search for it). Once you’ve located the install package, go ahead and get it on your system. Using a Terminal window, you’ll want to find the TiVo Decode directory and type: make. All done? Good!

(Update: A compiled PPC version is now available on SourceForge allowing you to forgo the Xcode steps. Additionally, a compiled Intel version with Automator workflow has been created.)

Lastly, you’ll want to find out your MAK (which you probably shouldn’t share). Go to tivo.com/manage, sign in, and verify Transfers ALLOWED is set for the relevant TiVo units (Series2 stand alone boxes onlt). If they’re not, click on the DVR Preferences text link on the left column and enable them. Back on the Overview screen, click the Media Access Key link on the upper right side to retrieve your MAK.

How do I download my TiVo shows?
On your home LAN, using the web browser of your choice surf on over to httpS://[tivo-IP-here]. (You can find your TiVo’s IP via the Settings menu or via your home router software.) Safari users shouldn’t need to look up their TiVo’s (possibly-changing) IP address: In preferences, enable Bonjour under bookmarks, then select the TiVo from Bonjour in bookmarks, and finally change the URL address from http to httpS. With either method, to sign on, use tivo for your username and the password is your personal MAK. Browse around and download the shows you’re interested in working with. Alternately, you can install and configure Galleon to choose and/or schedule various show downloads.

How do I remove TiVo’s gunk?
Fire up a terminal window, we’re going to build a command line string. First we have to call TiVo Decode if it’s not in your path. In my case:
tivodecode-0.1.2/objects.dir/tivodecode

Next we need to specify our MAK which is the decryption key:
-m ##########

Then we need to tell the app to output (-o) the file and give it a path and name:
-o distraction.mpg

Lastly, we must point to the path and source TiVo file:
distraction.tivo

So my final command looks like this:
tivodecode-0.1.2/objects.dir/tivodecode -m ########## -o distraction.mpg distraction.tivo

In just a minute or two, you’ll have a free and clear MPEG-2 to play with. Enjoy!

How do I watch shows on my Mac and iPod?
If you plan to watch your TiVo-ed shows on your Mac, you’ll need an appropriate player. Despite Quicktime offering an MPEG-2 plugin (for a fee), it does not handle this particular flavor of MPEG. Both VLC and MPlayer are excellent free video playing applications which will handle the converted TiVo files.

If you plan to use your TiVo content on a video-capable iPod or in QuickTime you will want to convert the resultant MPEG-2 files into MPEG-4. iSquint and ffmpegX are free and will do you just fine.

Check out a few convert-for-iPod automation scripts here.

How do I get shows onto DVD?
There are two ways to move your de-gunked shows onto DVD. The first method is something you’d use for simple archiving purposes, for later reuse on a computer. Just burn to CD or DVD the way you would handle any other sort of data using OS X built-in functionality. But what you really want to know is how to burn your content onto DVD for playback in a set-top box. As with QuickTime, iDVD and iMovie are not capable of handling this particular sort of MPEG-2, so you’ll need to use another tool to author your DVD or you’ll need to convert the video to something more Mac friendly. Roxio’s Titanium Toast is fully capable of creating set-top box supported DVDs from the extracted MPEG-2 files. In conjunction with Apple’s Disk Utility, the free ffmpegX can be used to convert and create your DVD.

Linux users: If you’re a Linux user, you can pretty much follow these guidelines (swapping out *nix-specific software) to enjoy your TiVo shows away from your TiVo.

Remember… Skateboarding is not a crime, but sharing video could be.

Financial analysis isn’t something I’m prepared to tackle publicly, so I’ve brought in some muscle for a multi-part series on TiVo’s numbers. Obviously this is speculative in nature and just one stockholder’s interpretation of the limited information TiVo chooses to disclose. Your mileage may vary. -DZ

TiVo is an enigmatic company. While management peppers us with regular press releases hyping their latest deal or newest technology, it rarely provides the kind of information investors need to put a value on anything –- be it a new advertising relationship, distribution deal, or their own financial statements. This is the first article in a multi-part series in which we will engage in a bit of 8-K and 10-Q exegesis in an effort to understand what is really going on at TiVo. In this first installment, we will take a look at the value of TiVo’s subscribers (something CFO Steve Sordello specifically declined to do in the 3Q results call), and find some interesting details along the way.

To find the value of a sub, we’ll need a few pieces of information: how long does a TiVo subscriber remain a subscriber, how much does he pay, how much advertising revenue does he produce? Note that through most of this discussion we are referring to “TiVo-owned” subscribers, and not considering TiVo’s DirecTV subs as they have an economy all their own.

TiVo’s churn hangs around in the 0.9% to 1.0% range, but let’s use 1.0% since it is the most recent number we have. To find the lifetime of the average subscriber, we want to know how many months go by before half of a given body of subscribers has churned away. That is, we need to solve the equation:

• 0.5 = (.99)^N

The result is that the average subscriber lasts about 69 months. (This is actually quite a spectacular result. Consider that DirecTV’s churn is 1.8%, giving them an average sub lifetime of only 38 months.)

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I’ve seen a lot out of Sun recently, and I’m not sure if I’m simply more attuned to it, or if the company is trying to up its profile. First there was the woman I met at DEMOfall from Sun who talked about her team of colleagues walking the show promoting Java. Then there was reading about Sun CEO Jonathan Schwartz’s blog. (It’s been around since 2004 – where have I been?) Then there was Sun’s big announcement in November about the official Open Sourcing of Java. And now there’s The Big Mashup.

Sun sent out a press release last week on its new “unique online experience” that’s supposed to show how Internet technologies are converging online and creating a “Participation Age.” This is a wagon that many companies are trying to hitch their carts to – the concept of convergence, new ways for people to interact and be entertained, etc. Sun’s Mashup sounds like a reasonably good idea, but its goals are nebulous at best, and currently the execution is seriously lacking.

If the Big Mashup is meant to be a participatory, multimedia form, it’s got a ways to go. The press release talks about a documentary, which is really a 12-minute video montage speaking at a very introductory level about new technology tools for user-generated media. The release also talks about a community blog, which I did not see anywhere. Instead there were individual blogs from industry notables, several of which linked to other sites, and some of which had very limited content.

Finally, Sun touted something called Snapp Radio, which brings together online music and Flickr images. (Everyone’s integrating Flickr…) A cool idea, but it requires registration with online music sites, and it appears to me to be more of a novelty than anything else.

So The Big Mashup isn’t much to look at, or listen to today. But it’s interesting to watch Sun forage into the great wide world of convergence communications. Is it purely marketing shtick, or will we see more out of Sun in the way of consumer-facing, media convergence efforts?

I haven’t been following the Wiki lately, but it looks like TiVoToGo encryption has been cracked and a barebones (as in command line) conversion app is out. What does this mean? You don’t need TiVo Desktop software or a PC (!) to decrypt and playback TiVo shows. Had TiVo released Mac (and Linux) decryption and playback tools of their own, this may have been avoided… Snooze, you lose. As Megazone notes, a GUI is needed and is probably forthcoming. I haven’t yet tried this on Mac or Linux platforms, but stay tuned… (I’m not even sure if the C program has been compiled for OS X yet.)

In the grander scheme of things, should this get a decent amount of press, it’s a black eye for TiVo… Which could dissuade potential content providers from partnering and/or dissuade CableLabs from supporting multi-room viewing and TiVoToGo features on the Series3, despite protected media (TiVoCast, Macrovision flagged stuff) not being available for TTG transfers. Image is everything.

UPDATE: I can verify this works on Mac OS X. And it works fast! I’ll have the first draft of a step-by-step guide up tomorrow for those who need a little hand holding (as I did). Secondly, if you have a DVD-burning TiVo your output files (of 0.1.2) will not playback audio. However, the developer has provided me a patch which corrects that issue. I assume he’ll integrate it into the app or provide a separate download shortly. Lastly, I can’t imagine we’re more than a few days away from a Mac front-end — all it would need to know is where the program lives, where the .tivo file lives, and what you want to name the output file. Someone should be able to whip this up in an hour or so. Along those lines, I begged Leon to come out of retirement and integrate this functionality into Galleon.

UPDATE 2: I’ve posted a brief guide to get Mac users on track. We’ll probably only need this for a few days, until someone more clever than I automates this and/or creates a GUI front-end.

(Thanks, half.italian!)

You may have noticed some down time over the last few days. While I can understand my hosting provider choking on big Digg days, as they did last week with the Ladies of eBay, I will not tolerate downtime on normal traffic days as they’ve done each of the last four days. I haven’t had much time this week to produce unique, quality content while wasting tons of time on the phone (support is overseas, servers are not — makes resolving issues time consuming) and trying to manage the technology behind my blog.

Current status: Hosting co. 1&1 (who I obviously don’t recommend at this point) will not credit me for down time, will not offer an apology, will not admit there’s a problem or correct it, and has stated I must move to a dedicated server @ $150/mo (despite using less than 3% of my traffic allotment) by 12/21 or find “another host provider.” How’s that for customer service?

I’m exploring other providers as well as chatting with a few blog networks about the future of ZNF. If you want to talk, drop me a line: davezatz@yahoo.com

12/3 UPDATE: Thanks for all the suggestions! 1&1 is forcing my hand… My site traffic and revenue do not warrant a dedicated server and 1&1 can’t or won’t reactivate FTP (spent over an hour on the phone Friday night, still not working on Sunday). This made it tricky to move my stuff but reinforced the point that I need a new home.

For the moment I have migrated everything to both BlueHost and Media Temple and we’ll see how things shake out over the next few weeks. So far we’re not off to a good start — both hosts had downtime yesterday (server on BlueHost went down, MySQL database on Media Temple went down several times). Despite TechCrunch’s effusive praise (without trying the service), MT has been experiencing growing pains (outages) with their new “Grid Server” solution. In theory, their server clusters should provide fault tolerance when hardware/software failures strike as well as overcome traffic spikes (which is why you’re reading this post from El Segundo). But should they fail to deliver, BlueHost is standing by.

All told, I’ve spent over 25 hours on this and I don’t think we’re done yet… Maybe it’s time for a new hobby.

A periodic roundup of relevant news…

• DirecTV SAT+GO! brown box does portable satellite TV: Gizmodo
• AOL offering free holiday movie downloads on Saturday: TechCrunch
• Wal-Mart joins the digital movie download fray: Engadget
• Better Options than Verizon-YouTube Lite: GigaOm
• Descriptions and prices of various media extenders: PVRWire